In USGAAP, Which of the Following Accurately Describe(s) the Effects of of Transactions

question 39

Multiple Choice

In U.S.GAAP, which of the following accurately describe(s) the effects of transactions involving investments on the statement of cash flows?

• A)When using the fair value method for trading securities and fair value hedges, both realized and unrealized gains and losses appear in net income.
• B)Dividends received from investee included in investor's cash flow from operations.
• C)When using the indirect method, add back realized holding losses, and subtract realized holding gains included in income for the period to derive cash flow from operations.
• D)All proceeds of sale of trading securities appear as [dis-]investing source of cash.
• E)all of the above

---

Definitions:

Positive Externality

A benefit that affects a party who did not choose to incur that benefit, often associated with public goods and services.

Patent Laws

Regulatory legal frameworks designed to protect the rights of inventors by giving them exclusive rights to their inventions for a certain period.

Business Monopoly Power

The ability of a single company to control an entire market, limiting competition and setting prices.

Resource Allocation

The process of assigning available resources in the most efficient manner to meet the objectives of an organization or economy.